Compromised minister cannot deliver rational regulations
The problem with the Guptas’ capture of the state is that nothing the government produces can be trusted. Take the Mining Charter, which was released last Thursday. It is going to be tied up in court for a long time precisely because the government is so profoundly and deeply compromised.
The charter was developed secretively with no consultation. Even the ANC seems to have been unaware of what was coming, and now the mining minister has been summoned to explain himself to the party.
Mosebenzi Zwane, who was plucked from obscurity in the Free State government to become mining minister in September 2015, simply cannot meet the legal standard required of someone in charge of policy.
He is hopelessly compromised. The Gupta e-mail leaks have revealed that his CV was passed by them prior to his appointment and they paid for his flights and hotel accommodation in Dubai and Switzerland. He trashed the separation between regulator and regulated when he intervened in the Guptas’ effort to buy Optimum Coal, meeting Glencore CEO Ivan Glasenberg alongside representatives of the Guptas.
Anyone taking administrative action has a constitutional requirement to be free from bias. There is no way the minister meets that standard. His capture by the Guptas means everything he does is now subject to question.
The charter will be held up in court for a long time on the question of whether it meets legal standards for administrative action. This is not the only legal hurdle; the charter also contains other legal absurdities such as the requirement to pay 1% of annual turnover to black holders of 30% of the company, in complete violation of the Companies Act’s requirement for shareholders to have equal rights. There is also ambiguity about whether there is any legal basis for the new charter anyway, given that the main mining legislation refers only to “a” charter and makes no provision for revisions.
In an ideal world, regulation of the mining industry would be driven by what is in the best interest of SA. It would be tough, rational and fair. It would encourage mining businesses to employ as many people as possible, contribute tax revenue, operate safely and look after the environment, while supplying raw materials to help develop the country. It would ensure the industry plays its part in undoing the legacy of apartheid and colonialism. Policy would be developed in an open and transparent manner, with all interest groups able to state their case.
That perfect world is, unfortunately, very different to the one we find ourselves in.
Within hours of the charter’s appearance, the Chamber of Mines had announced it would apply to have it interdicted.
This continues the decidedly litigious stance the industry has taken towards the government. This flows from a calculation that hostility gets better results than trying to engage diplomatically. The last serious effort by the industry, along with labour, to engage with the government to jointly develop a vision for the industry resulted in the creation of the Mining Industry Growth Development and Employment Task Team in 2012. The government has since ignored it. The industry feels its trust has been betrayed and an adversarial stance is what’s needed.
Court action so far has been remarkably successful. AngloGold Ashanti and Sibanye Gold have won the right to sue mine inspectors in their personal capacities if they order irrational shutdowns. That came after the mines became convinced that so-called section 54 shutdowns were being used as a political bludgeon rather than a rational effort to promote safety.
The chamber is also resuming litigation over the validity of the once-empowered, alwaysempowered clause of the old charter. It had agreed to park that litigation while it discussed transformation initiatives and the new charter, but that gesture of goodwill has been spurned.
This is taking place in a context in which the mining industry is battling to keep its head above water. Huge employers like Lonmin are on the verge of bankruptcy. Firms that are managing to succeed, like Sibanye, are doing so by slashing costs, operating anaemic head offices and cutting workforces. In summoning Zwane, the ANC said 60,000 mining jobs had been shed in the past five years and it was worried about more.
Zwane is likely to find himself with few allies. Organised labour is well aware that mines are battling to survive as is. The ANC is well aware of the political consequences of tens of thousands of people, with hundreds of thousands of dependants, being added to already outrageous unemployment figures. What we should ask ourselves is how a man like Zwane was able to get himself into such a position. And the answer is clearly the Guptas.
IN AN IDEAL WORLD, REGULATION OF THE MINING INDUSTRY WOULD BE DRIVEN BY WHAT IS IN THE BEST INTEREST OF SA